UK firms keep quarterly ad budgets flat, plan 2013 rise - survey

Reuters Staff

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Shoppers pass an advertisement for the forthcoming James Bond film, Skyfall, on the electronic screens at Piccadilly Circus in central London October 21, 2012.Toby Melville

LONDON (Reuters) - British companies kept marketing expenditure broadly unchanged in the first quarter although more of them expect to increase rather than cut their budgets in 2013, an advertising industry survey showed.

The IPA Bellwether report said 17 percent of companies signalled a rise in marketing spend in the first three months of this year - broadly similar to the percentage that cut budgets, resulting in a net positive figure of 0.1 percent.

But the survey, published by industry body Institute of Practitioners in Advertising, found that 36 percent of firms were planning to raise 2013 budgets relative to last year compared with 23 percent anticipating a fall.

The planned rise in 2013 budgets is modest compared with pre-financial crisis levels.

"While the Bellwether is suggesting the economy is recovering, it looks set to be another challenging year for businesses and the pace of economic expansion is likely to be modest," said Chris Williamson, Chief Economist at Markit and author of the report.

Based on macroeconomic forecasting, the Bellwether report predicts advertising spending will fall by 0.3 percent this year but will grow 2.3 percent in 2014.

Growth was strongest in internet advertising, the survey found, with a net balance of 8.9 percent of companies planning to spend more - the fastest rise in six quarters.

The IPA Bellwether report was drawn up from a survey of around 300 companies based in Britain.